After the successful launch of Pakistan Energy Sukuk of Rs. 200 billion, the government is set to release another slot of Islamic bond worth Rs.200 billion in the capital market in May.
This Sukuk bond would go by the name of ‘Pakistan Energy Sukuk-II’ and listed in a bid to resolve the power sector’s burgeoning circular debt. The government will float the bond on the Pakistan Stock Exchange (PSE) under over-the-counter (OTC) listing.
The Ministry of Energy has set the maturity period of this bond as 10 years while founding the profit rate on Karachi Interbank Offered Rate plus a margin of 80 basis points (Kibor+0.8%).
The government raised the same proceeds from ‘Pakistan Energy Sukuk-I’ on March 1. According to the sources, the government is set to contain the power sector’s circular debt to Rs.250 billion by December 31.
As for now, the circular debt of the power sector stands at Rs.1.410 trillion. This amount includes the bank loans of Rs.603 billion provided to Power Holding Private Limited (PHPL) and the remaining circular debt of Rs.807 billion.
The government had earlier released Rs. 200 billion to the energy companies to curtail circular debt. The upcoming fund will further alleviate the liquidity crisis facing the energy sector.
Notably, the power sector owes billions of rupees to oil and gas suppliers among other companies.
Just as the last transaction, Meezan Bank is the lead arranger of the Sukuk. Whereas, the power division-owned PHPL is going to be the issuer. The financial facility will bring on board institutional investors including mutual funds, Islamic banks, and financial investors.